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The Journal Editorial Report

News/Business. Paul Gigot discusses news, politics, society and finance. (CC) (Stereo)

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  FOX News    The Journal Editorial Report    News/Business. Paul Gigot discusses news,  
   politics, society and finance. (CC) (Stereo)  

    January 2, 2010
    2:00 - 2:30pm EST  

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>> this week on the journal, editorial report, a new year and a new set of challenges for the country and for president obama amid high unemployment, will the economic recovery continue? and with obama's declining approval ratings, will the g.o.p. make big gains in the mid term elections? and with trouble spots all across the globe, will the president's policy of engagement finally show results? all that and our panel's predictions for 2010. welcome to the journal, editorial report, i'm paul gigot. well, with the new year comes a new set of challenges for president obama and his party. not the least of which are the
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2010 mid term elections, with the president's job approval below 50% and a potential health care backlash brewing, can republicans make some big electoral gains this november. joining the panel this week, wall street journal columnist and deputy editor dan henninger, editorial board members, dorothy, and jason riley and column mary anastasia o'grady and senior economics writer steve moore. steve, starting with you, the president's approval rating has fall faster and farther than modern president. how much trouble are the democrats in? >> they're certainly lucky the mid term elections aren't tomorrow. right now they're looking in really deep, deep water. a lot can change in the last year but i do think there are amazing parallels between the situation the democrats are in today versus they were, remember, paul, back in 1993 after bill clinton's first year in office and anybody with a d
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next to their name lost elections in that following year so i think that democrats are facing a big problem. the one thing that could bail them out would be an economic recovery. >> well, but there's one difference between now and 1994, jason, that is that it looks like they're going to pass health care this time around and they failed in 1994. and rahm emanuel's argument, the white house chief of staff's argument, if you pass this that won't happen to you. if you don't pass it you'll lose just like-- >> well, it's a double-edged sword of having the majority in both the white house-- having the white house and a majority of the congress is that you get to push through legislation on a partisan basis, but then you own it. your party owns it and so, as this passing health care could be what does them in in the mid term elections. >> now, passing health care could do that? >> why? >> the backlash. >> a great triumph why would there be a backlash? what backlash are you talking about.
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>>? the mid term elections the president's party traditionally loses seats in congress. already you have some skittish democrats, deciding not to run. >> what is it about health care in particular that is going to be troubling for them? >> well, you have taxes going up to pay for health care now, benefits not kicking in until years down the road. >> i see, so nobody will see their benefits, meanwhile, the regulations and the taxes hit right away and mary, maybe, maybe insurance prices go up? >> you know, all of those things may happen, paul, but i think the republicans would make a big mistake to be too over confident this year. one of their problems is going to be the sort of tea party thing brewing over in the corner which is the possibility that people will, you know, they'll be independent candidates and i don't think the republicans have shown a cohesive unified clear message and i think that people will be asking themselves in 2010, am i better off than i was in 2008? a lot of people feel like they're not, so they'll be dissatisfied, but i don't think that necessarily means a big sweep for the republicans. >> can i pick up on mary's
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point? i know the democratic reelection leadership has said explicitly they do not expect the republicans to pose much of a substantive challenge. they haven't said much of obama's first year, you can't beat something with nothing on policy. >> but, dan, you can. the democrats beat something with nothing in 2006. they offered nothing except we're not george bush and we don't like iraq. >> well, i don't think republicans-- some republicans don't want to run that way. there's something very interesting going on in the senate which is that senator jim demint, who is the head of the senate steering committee is posing his own-- south carolina. own candidate in opposition, in california come up with a candidate conservative businessman named chuck debore who he's running against carle fee or rina. in florida o'rubio, against
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charlie crist. the democrats will say this means that the republican party is once again tearing each other up. i think it's good competition, if at the end of the day the winners of those primaries are supported by the republican voters. >> and you'll have interesting trends in 2009. the two governorships in virginia and new jersey going republican. >> right. >> and you had some democrats in vulnerable districts announcing they're not going to run. you had a party switch, conservative democrat switching to the republican party. so, it will be interesting to see if the republican can continue this momentum going forward in the mid terms. >> go ahead, steve. >> can i raise a point about sort of what the democrats do now. assuming they have got their health care bill pretty much passed, now the democrats that i talked to say we have to pivot back to the middle. get back to the center where the american electorate is and how do they do that on what issues, what issues are they going to do that. clearly the president is going to sound next year like a big ronald reagan conservative, a
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deficit hawk, i don't think he can pull that off after the 2 trillion dollars of debt this year and the other issue to look out for in 2010, in my opinion, paul, the national sales tax. democrats have to pay for the spending they've con. >> i agree with you, taxes are going to be a big issue, but i think they're going to pay for it, but i think the sales tax we put off after 2010, 2011. >> you may be right. >> so republicans are going to have to bring it up. all right, that's it for this segment. all eyes are on the economy. as we begin the worst may be behind us, but what kind of recovery lies ahead? will you be paying more taxes in 2010?
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- hi, i'm halle berry, and as a new mom, i can tell you that childhood is a magical time. but for children with diabetes, life is not quite so carefree. the barbara davis center for childhood diabetes is fighting hard to find a cure. know the signs: irritability, excessive urination, weight loss. if you have any of these signs, please call your doctor.
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early detection can save your life. give to save lives and reach for the cure. call now or log on to childrensdiabetesfoundation.org. >> with the new year come new hopes for an economic turn around and stocks at least seem to be headed in the right direction. the dow jones industrial average ended above the 10,000 mark after a disastrous winter, but the unemployment rate is still hovering around 10% leading many to wonder if we're in for a jobless recovery. mary, i think we're in a recovery and i think it seems to be gaining speed, but how strong will it stay in 2010? >> well, i think you have to
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remember how far it fell because that's going to tell you a little about how much it's coming back. >> paul: it was really far. >> it was a big decline and now you're seeing first time jobless claims are going down. you're seeing corporate earnings improving, you're seeing an inventory push, temporary health jobs, incomes are responding to more hours worked. so, you know, you're seeing things start to be more positive. also, commercial real estate that a lot of people are worried about is a lagging indicator and you know, you have not to use too much technical jargon, but you have a steep yield curve which generally predicts a recovery. >> paul: and banks can borrow cheaply money near zero interest rates, but can lend longer at 3 or 4% interest rates. >> right, that's one of the things the fed is doing to help the banks repair their balance sheets. those are all positives. one thing i'll say, when the economy starts to look healthy that's going to be the time when the stock market starts to slow down a little bit because that's
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when people are going to be expecting the fed to raise rates. >> paul: the federal reserve raise interest rates. i think it will happen sooner than the concensus expects. dorothy, unless people feel like this recovery is real, and that really, means unless they see their neighbors getting hired, themselves getting raises they're not going to feel like they're in a recovery. >> and they don't now. the push, the great extraordinary emergency the need to reform health care. of course pushes aside the central concern in people's lives. they're living on part-time jobs. huge, the new jobs are all part-time jobs and dimmer and dimmer is the prospect of long-term employment. now, this is the real issue and i have to say that normal american citizens in the aftermath of this health care passage bill do not walk around saying my life is better because the democrats have won a legislative pass sang. >> you're disappointing rahm
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emanuel with that, dorothy. >> i think that housing will continue to be a drag on this economy this year. you have one in four home owners underwater, meaning they owe more than their homes are worth. you have more than seven million-- >> we've been pouring hundreds of billion dollars worth of mitigation, where has it it gone. homes are behind in their payments or in foreclosure. thises going to continue to put downward pressure on housing prices in 2010. >> here is one big problem, there have been three unemployment peaks in the post war period, during the kennedy administration in 1964, nixon 1975, and reagan who was at 10% unemployment in 1983. what they did in all three instances was essentially reduce the tax burden, right? unfortunately, obama is looking back to fdr, which is a public sector led recovery. that's the only time we had 10%
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unemployment ten straight year which was the depression. >> paul: 1930's. >> i'm looking at unemployment coming down at best to 8.5%, if it stayed at 10 or rose because they're rising the tax burden i'm not going to be shocked. christina romer says if you pass the stimulus the jobless rate won't be above 8%, now it's 10 and now she says probably not to 9 1/2%, much below that by next november. are you more optimistic than that? >> you know, what's keeping the folks at the white house up at night is that unemployment number. the fact that we have 15 million unemployed and i think that dorothy is right no matter how many times the white house talks about how wonderful things are in expansion, if we don't see an expansion of jobs, the democrats are in trouble. and the president keeps saying that he's averted us from a 1930's style depression and that might be the case, but what i'm seeing and i agree with dan, i'm seeing the policies of the 1970's, which was the second worst decade of the last hundred years when you had high inflation high unemployment,
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stagflation, nothing we're doing in washington right now is promoting growth and certainly when you raise tax rates on businesses that dopt get employers to hire workers. >> paul: what could be big negative surprises in 2010 economically. >> what worries me, we're creating a bubble in the stock market and people are putting money in the stock market because of low interest rates. .10% and i think it's an artifical in many moves. >> paul: a correction coming, could this be the peak. >> no, i don't think this is the peak, but i think in this year, in 2010, that the stock market will, you know, the public will grow bigger and then-- >> all right, when we come back from obama's afghan surge to iran's troubled regime, a look at stories sure to make headlines across the globe in the year ahead. o
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>> from the left opposition to the afghan surge to iran's continued nuclear defiance, a world of troubles awaits the administration as the new year begins. and jason, particularly iran where democratic protests are continuing below the surface, but clearly very powerful. at the same time that iran continues to defy world opinion and push ahead with its nuclear program, are we looking this year at a showdown between president obama and iran? >> we could be. i think the more interesting showdown though might be between iran and israel, who i think has less patience than obama might have here. so that will be interesting and as minced protests. >> paul: you mean a possible military attack?
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>> yes, yes possibly. i would not be surprise israel reacts sooner than america. israel does not want to do that we know that, because the consequences would be severe not just return fire on israel, but much of europe and also in the world community. so president obama wants to forestall that, but is he going to act in time? can he rally the world opinion to forestall that? >> no, i don't believe he can. >> paul: you don't believe he can? >> i do believe he thinks he can because he thinks he can get u.n. sanctions together and china is saying no dice we don't want to do it. >> well, you know, this raises my biggest concern about this coming year, paul, which is this is going to be the beginning of the surge in afghanistan, big commitment, it's complicated by the behavior of the pakistanis as well. this is a really big thing for barack obama. i think my question is, can he handle two big crises and
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something like iraq would be-- or iran, iran would be that and it's not clear to me that this white house has the will to take on two or three big things and, you know, the world being what it is, there is inevitably going to be something else other than afghanistan to hit this white house. >> paul: on that point, dorothy, it sounds to me as if everything you hear from the administration they want to have this afghanistan be a nice discrete political problem that the military handles that robert gates, the defense secretary handles, the president doesn't mess his own hands up while he's trying to do great domestic reforms. can he pull that off this year. i don't think he can and i don't know what he will do when he decides, when he sees that this is a muddle that's going to take much longer than possible. >> paul: and his own political capital to succeed? >> indeed and this is true, but that back to iran as well. there's a real possibility that the government control in iran, there's a real possibility is that not just a quiet revolution and-- >> that would be fabulous. yes, it would, but i'm not sure
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that the administration is prepared for this and this is one of the things that, to think about. >> paul: what do you mean prepared for it. not pushing hard enough for it. >> not pushing hard enough and not pushing to see what will they do in the event that this, that this event takes place? which is very promising. they're increasing rebellions in iran. >> paul: and not doing much to promote it. they're split. probably would rejoice if the regime did fall and engage the regime and-- >> they keep engaging and engaging and they keep being pushed back and refused. >> paul: pushing back to guantanamo. the president promised a january 22nd deadline for closing it, don't think he's going to make it, mary? >> no, i don't think he's going to make it. he's really opened a big can of worms with this, not only because of his promises to close gitmo, but also because of his proposals to move it to southern illinois, which will be not only, you know, uncomfortable
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for the people of illinois, but also, extremely expensive and there's some question now about how they can actually secure that location. >> paul: i think they can secure it if they have enough money. i don't know that they're going to get the money from congress to do this. congress, the democrats don't want to take a vote saying, yes, we voted to bring terrorists from gitmo off shore into illinois. how do you feel about that, american voters? they don't want to make that vote. >> it's like the commitment that obama made in copenhagen we're going to spend hundreds of millions of dollars to help the developing world reduce carbon. the democrats want to spend the money in the old u.s. of a and they're spending money there and stuff like this is going to be marginal for congressional democrats. >> and also the decision to try the 9/11 terrorists in new york, these are political decisions that obama's making to throw bones to his left wing. >> paul: and a big wild card this year, the special counsel, that attorney general eric holder appoint today look into whether the cia and bush administration officials should be indicted for their anti-terror policies.
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if he indicts, recommending indicting some of those you're going to see a firestorm. >> there's a good chance he'll make that recommendation. >> paul: all right, dorothy. we have to take one more break and when we come back the big events that will shape 2010 and beyond. our panel's predictions are next. @
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>> time now for our new year's predictions and it's on tape, so we're going to hold you to them, all right? play them next year, dan. >> well, paul, my prediction flows out of all the anxiety we've been pumping out on this program tonight. i'm predicting there is the possibility of an independent or third party movement emerging in the united states. i know they're usually hopeless, but look what's been going on not just in congress, but the legislatures in california, new york, new jersey are in a state of crisis and i think there is a crisis of governance emerging in the united states and that the american people are upset not just at the democrats, but at
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the republicans. so, if some billionaire steps forward to run, i'm not going to be shocked. >> paul: dorothy. >> well, as we were speaking earlier, there is the plan afoot to move 112 prisoners from guantanamo bay, the closing which is the signature moral issue of the obama administration to a rural place in illinois, chicago, thompsonville. my prediction is if this will happen there will be an instant of riotous outbreaks from the left and anti-war demonstrators in the streets. the prisoners themselves will be complaining bitterly. >> paul: in the streets of thompsonville. >> in the streets of thompsonville, the diet, lack of facilities for religious observance and the a.c.l.u. will be taking their cases and in the midst of this turmoil we will see president obama and eric holder declaring this is a victory for american values. >> paul: we can't wait for that. jason? >> my prediction is that president obama will get another supreme court pick this year
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when justice ginsburg retires. she will be replaced by justice diane wood or judge diane wood of the 7th circuit court of appeals and justice wood will be an improvement. >> paul: an election year supreme court fight, wow, okay. mary? >> my prediction is that the chairman of the senate banking committee, senator chris dodd from connecticut will not run for reelection in november. mr. dodd, who's been in congress for 39 years, is running into terrible political problems. 's now polling around 40% approval in connecticut and put up against the three most possible republican candidates, he's not showing that he could beat any one of them. so, i think that his friends in the senate will say, listen, we need this seat and i think you should spend more time with your family. >> paul: we have an offer you can't refuse. all right, steve? >> the cubs are going to the world series in 2010. i know i've made that prediction the last five years, but this
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time i feel confident. >> paul: i think the last 40 years, steve. >> unfortunately they're going to lose to the yankees. second i think we're going to see movement towards a college football playoff system and most importantly, tiger woods will make a triumphant return and he will win the u.s. open at pebble beach and america will have for given him. >> paul: yeah, steve, this is your-- sounds like about 50-year wish list predictions. all right. my prediction is that the u.s. supreme court will overturn, at least to most of the conviction of conrad black, the imprisoned former newspaper publisher and in doing so they'll issue a landmark ruling on the honest services statute which has been used by prosecutors, overused by prosecutors to throw in business people, accuse them of white collar crimes that may or may not be crimes. that would be a landmark event for justice if it happens. all right, that's it for this week's edition of the journal editorial report. thank to my panel and to all of you for watching,'m